Rupee falls 19 paise to 82.85 against U.S. dollar amid losses in local equities

Indian rupee depreciated on a positive U.S. dollar and weak domestic markets.

The rupee depreciated by 19 paise to settle at 82.85 (provisional) against the U.S. dollar on Friday amid weak sentiment in the equity markets and a strong dollar against major rivals overseas.

Foreign fund inflows and softening crude prices, however, supported the Indian currency even as investors were awaiting India’s industrial output number, to be released later in the day, said analysts.

At the interbank foreign exchange market, the local unit opened at 82.75 against the U.S. dollar. It touched the peak of 82.73 and hit the lowest level of 82.87 during intra-day trade before settling at 82.85 (provisional) against the greenback, 19 paise lower from its previous close.

“Indian rupee depreciated on a positive U.S. dollar and weak domestic markets. However, FII inflows and overnight decline in crude oil prices cushioned the downside,” Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said.

On Thursday, the rupee rebounded 19 paise to close at 82.66 against the U.S. dollar after the RBI asked banks to set aside a larger part of incremental deposits under the cash reserve ratio (CRR) as part of measures to take out excess liquidity from the banking system.

The Reserve Bank of India in its bi-monthly monetary policy review also decided to keep key interest rate unchanged, but hinted at tighter policy if food prices drive inflation higher.

In the overseas currency market, the dollar strengthened after U.S. consumer price inflation showed moderation in July, raising hopes that the U.S. Federal Reserve would pause rate hike.